A three-member committee selected L&T out of six companies that bid for the mega project, which was initially awarded to Maytas Infra in 2008.

The authorities called for fresh global bids last year after scrapping the deal with Maytas, a sister-concern of scam-hit Satyam Computer Services, as it failed to achieve financial closure.

Eight consortia had qualified to file the financial bids. These include consortia led by Reliance Infrastructure, Lanco Infratech, GVK, GMR, L&T, Soma-Straburg, Transstroy and Essar groups.

GVK and GMR pulled out even before submitting the financial bids amid reports that the bidders were apprehensive of the financial viability of the project in the changed scenario.

The 71.6 km-long elevated metro rail project will be taken up in public private partnership on design, build, finance, operate and transfer (DBFOT) basis.

The work on the project is likely to start by October and the entire project is expected to be completed in four years.

Maytas-led consortium had bagged the project in 2008. The government also forfeited Rs 71 crore deposited by the consortium as performance guarantee and as advance towards Rs 30,311 crore it promised to pay to the government over the concession period of 35 years.

BANGALORE: For Dharmashekar, this is going to be a different train experience all together. "I just cannot wait to travel by this swanky train. It's great that Bangalore will have a metro of its own," said Dharmashekar, a resident of R T Nagar.

For hundreds of Bangaloreans, the 'pride' factor doubled when they saw the mock-up train of the Metro, which was kept open for public viewing on Friday. "It is really good. I came from Lakkasandra just to see how this model Metro looks. I waited for 30 minutes and the experience of being inside the coach is amazing," said Lakshmi Devi.

The Reach 1 (first train) will chug along in December, this year.

Chief minister Yeddyurappa was equally excited: "I am happy that public will have a feel of Metro before it is commissioned. I am also eagerly waiting to travel in it. The Reach 1 (Baiyappanahalli to cricket stadium) of Metro rail will commence as per schedule."

After the formal inauguration by Yeddyurappa, the mock-up coach was thrown open for public viewing. People rushed to sneak in to the coach and captured images of the Metro. Despite the huge crowd, they made themselves comfortable on the fibre seats in the coach.

CHECK IT OUT:

You can visit the Metro rail from 10 am to 8 pm every day on MG Road.

WHAT DOES IT HAVE?

There are dummy equipments below the coach to understand the positioning of electrical propulsion systems. The contract for supply of 150 coaches has been given to a consortium comprising of BEML (India), Hyundai Rotem (Korea), MELCO (Japan) and Mitsubishi Corporation (Japan) at a cost of Rs 1,670. 76 crore.

Each train set consist of 3 cars (coaches) initially- a Drive Motor Car (DMC), Trailer Car (TC) and a Driver Motor Car (DMC). Each coach of DMC has a capacity for 43 seaters and 273 standing passengers. TC has 50 seaters and 293 standing capacity. In total, the train can carry 975 passengers.

Passengers can learn the routes covered by Bangalore Metro Rail as the route map is displayed inside. Besides, there are also CCTV cameras inside. Each coach has four cameras for security. There are eight doors in each coach and four on each side.

All the coaches are air-conditioned and designated space is provided for the handicapped in DMC. In case of emergency, passengers can speak to the driver. This is possible through Passenger Emergency Alarm System that will connect to the Operation Control Centre (OCC). Other features of the coaches would include 6 LCD displays for passenger information, mobile/laptop charging points.

(Reuters) - The World Bank is exploring whether to invest in an $11 billion debt fund the Indian government will roll out by next year as part of a massive push to its infrastructure sector, the bank's India head said.

Roberto Zagha said India was making progress in tackling procedural hassles that have held back faster infrastructure growth but a major roadblock to more private investment was a shortage of bankable projects.

The World Bank was likely to lend around $15 billion to $20 billion to India's infrastructure sector in the next five years. Typically the bank's lending to the sector ranges between 40-60 percent of the total annual lending.

The government has announced the $11 billion debt fund as a part of a series of recent measures to overhaul India's creaking infrastructure, which has long been seen as hobbling faster growth in Asia's third-largest economy. A similar fund is also under consideration for the power sector.

"It is being explored," Zagha said in an interview as part of the Reuters India Investment Summit, when asked whether the World Bank would contribute to the fund.

"Our role is not entirely clear, whether there is a need for finance from the bank, or whether there is a need for expertise from the bank," he added.

Pending legislation to give farmers a better deal in land acquisition would be a big step towards balancing development with social justice and help ease the implementation of infrastructure projects, he said.

The Indian government plans to double spending on infrastructure to $1 trillion in its next five-year plan, which runs from 2012-17.

"That's a statement of intent," said Zagha, referring to the spending target. "There's a sense of urgency in the government which I didn't see before. That's very encouraging."

There was at least $50 billion to $60 billion untapped investor potential in water and sewage treatment projects alone, he said.

"I don't think financing is an issue." he said. "The greatest challenge is bankable projects. Investors will come, financing will be found if you find ways of making projects which are commercially attractive and bankable."

The fiasco of New Delhi's preparations to host the Commonwealth Games has proved an embarrassment to the government and raised worries in some quarters, including the rating agency Moody's Analytics, that it could deter foreign investment.

"I don't think it matters," Zagha said, when asked whether the Games could hit investor sentiment. "But it does show the organisational issues that India has to deal with."

India's infrastructure sector output grew 3.7 per cent in August from a year earlier, slower than an upwardly revised annual growth of 4.0 per cent in July, government data showed on Wednesday. During April-August, output rose 4.1 per cent from 4.8 per cent a year ago.

The infrastructure sector accounts for 26.7 per cent of India's industrial output. India's industrial output accelerated at a faster-than-expected 13.8 per cent in July from a year earlier, its fastest growth since April.

India expects to invest about $500 billion in infrastructure, mainly in power, telecommunications, roads, railways and oil pipelines in five years to end-March 2012.

The Indian government plans to double spending on infrastructure to $1 trillion in its next five-year plan, which runs from April 2012.

Foreign investment will play a secondary role in resolving India's infrastructure deficit in the near term given the complexity of completing projects, executives and officials told the Reuters India Investment Summit this week.

Power, for example, attracted $1.44 billion in foreign direct equity investment in the most recent financial year -- a pittance in the context of India's hopes for $350 billion to $400 billion of funding for power for the five years starting in 2012.

"I don't see any completely independent plants being set up by foreign companies," Bal Krishna Chaturvedi, the government Planning Commission's member in charge of energy and infrastructure, said in an interview for the Summit.

"The main entrepreneur continues to be Indian. This model we find is not a bad one because he knows the conditions here, he's able to handle it much better than a foreign partner," he said.

A lack of attractive opportunities and early-stage delays often deter investors from tying-up capital in long-term projects in India, prompting many instead to gain exposure by taking stakes in listed operators or investing through private equity.

The challenges to getting big projects completed were underscored by the chaotic preparations for the upcoming Commonwealth Games in New Delhi.

"India is competing for global capital. Even infrastructure in India has to compete for capital, so the government, Planning Commission, should remain mindful of that," Anoop Seth, co-head of Asian infrastructure at AMP Capital Investors, a unit of No. 2 Australian wealth manager AMP, told the Reuters Summit.

New Delhi is keen to increase foreign investment in projects as it targets a doubling in infrastructure spending to $1 trillion in the five years starting in 2012, half of which it hopes will be privately funded. Of a planned $11 billion infrastructure fund, half could be raised from overseas investors such as insurers and sovereign wealth funds.

The demand for capital is clear. India was by far the world's biggest market for project finance loans last year at $30 billion, according to data from Project Finance International, but funding was dominated by onshore lenders led by State Bank of India , which topped the global league table.

SLOWING

FDI Overall foreign direct investment in India fell by about 25 per cent in the year through July to $12.6 billion, even as FDI into China rose 21 per cent over the same period to $58.4 billion.

However, overseas funds are flooding into stocks at a record pace of $18 billion this year, driving a rally that highlights the preference many investors have for the liquidity and risk profile of listed assets in India.

Gautam Bhandari, a managing director at Morgan Stanley who heads the Wall Street bank's infrastructure fund in India, said work still needs to be done to streamline planning and permissioning to get projects to the construction stage.

"I think once that gets solved you'll get increased levels of FDI," he told the Reuters Summit.

India spends 6 per cent of its GDP on infrastructure, nearly half the 11 per cent invested by China. The shortfall is evident in the decrepit roads of Mumbai and frequent power cuts in large parts of a country whose economy is growing at 8.5 per cent.

A top official at the National Highways Authority of India, said in a Reuters Summit interview that foreign investors would probably fund up to 30 per cent of a planned $18 billion in road-building in the current financial year.

The entire construction sector, including roads and highways, attracted FDI equity in the fiscal year that ended in March of $2.86 billion, government figures show, and just $221 million in the first three months of the current year.

"I think the trend is going to be the same. There is not going to be much," G.V. Sanjay Reddy, vice chairman of infrastructure builder GVK Power &amp; Infrastructure , said when asked during the Reuters Summit about foreign direct investment in infrastructure.

He said the technological gap that multinationals could bridge in the 1990s has largely been closed, and local players have the know-how to navigate a challenging environment.

"India's regulatory system -- we all expect it to behave like one country as if it's China, but it's actually more like Europe," he told the Summit. "The language changes every 500 kilometres, and the culture changes, and then you have even the law changing in certain states, or the way it is administered."

S Naren, chief investment officer for equities at ICICI Prudential Asset Management, said local knowledge is key. "More than FDI, I would say that it is private equity money which is entering the sector, because at the end of the day what is required is a local company to implement the project," he said.

India's infrastructure sector output grew 3.7 per cent in August from a year earlier,

India's infrastructure sector output grew 3.7 per cent in August from a year earlier, slower than an upwardly revised annual growth of 4.0 per cent in July, government data showed on Wednesday. During April-August, output rose 4.1 per cent from 4.8 per cent a year ago.

The infrastructure sector accounts for 26.7 per cent of India's industrial output. India's industrial output accelerated at a faster-than-expected 13.8 per cent in July from a year earlier, its fastest growth since April.

India expects to invest about $500 billion in infrastructure, mainly in power, telecommunications, roads, railways and oil pipelines in five years to end-March 2012.

The Indian government plans to double spending on infrastructure to $1 trillion in its next five-year plan, which runs from April 2012.

Shifting its focus from the US and other European nations, Canada has assured India to invest USD three billion in highways projects in the next five years, Road Transport and Highways Minister Kamal Nath said.

"Earlier Canada was parking funds in western countries mostly the US, I sensitised them...they showed a lot of interest. Over a period of five years, I think we should have close to USD three billion," Nath said.

He said he had talked to a large number of funds there, including pension and insurance funds and they have evinced interest in the India's infrastructure sector.

"I am optimistic that we would see some interest from pension funds and insurance funds (from Canada) because those are the kinds of funds, which for the long term infrastructure funds are the most desirable," Nath said.

The move comes in the wake of India raising cap on foreign institutional investors (FIIs) investment by USD 5 billion in government and corporate bonds each. Besides, the government allowed FIIs to invest additional USD 5 billion in bonds issued by companies engaged in infrastructure sector.

The country needs about USD 70 billion for building roads in the next four years and Nath had earlier said that USD 40 billion requirement would be met from the private sector, of which USD 10 billion is likely to come from foreign funds.

With an aim to ease traffic congestion on busy Ajmer Road here, India's first three-deck elevated track , costing around Rs 200 crore, will be constructed with a metro line on top, officials said.

"A total 2.95 km elevated track, which will include a four-lane 1.6 km double-decker road (connecting Sodala to Civil lines), will be constructed from Gopalpura Badi to Sushilpura on Ajmer Road," they said.

The ground level would be used for light vehicular traffic and Bus Rapid Transit System, while the first level will be for heavy vehicles. On deck three, a metro track will be laid.

The project will be Delhi Metro Rail Corporation, which has signed an agreement with Jaipur Development Authority on Saturday.

Jaipur Metro Rail Corporation Chairman G S Sandhu said this will be India's first such structure, which is expected to complete by 2013 with an estimated cost of Rs 200 crore.

He said the project was proposed under the Jawaharlal Nehru National Urban Renewal Mission and since a metro-line was also planned on the Ajmer Road stretch, the government decided to construct the structure.

Foreign investors are likely to fund up to 30 percent of India's $18 billion road projects in the current fiscal year, a top official at the National Highways Authority of India (NHAI) said on Monday.

J.N. Singh, member finance at the authority, said Asian and European companies were participating as minority stakeholders in road projects and the appetite was good.

NHAI, which builds, maintains and manages highways, has awarded contracts to build 3,000 kms of road between April and August and looks to award another 6,000 kms before the fiscal year ends next March, he told in an interview for the Reuters India Investment Summit.

"Companies from Spain, the UK, Italy, Saudi Arabia, China , Russia and Malaysia are actively participating in the BOT mode of the national highway development programme," Singh said, referring to Build-Operate-Transfer partnership models.

India needs to invest $80 billion in the next two years to revamp highways and is expecting the private sector to fund half of the project costs, Transport Minister Kamal Nath had told Reuters last week.

But underdeveloped domestic bond markets and restrictions on investments of pension and insurance funds ensure the country's infrastructure developers rely mainly upon overstretched banks, which provide only short-term funds.

The government has announced a series of measures to boost funding for infrastructure. Last week, New Delhi lifted the cap on foreign investment in the debt market to address the long-term capital requirements for the sector.

The move comes on the heels of a plan to set up an $11 billion debt fund by next year. There is also a proposal to allow India's top state-run infrastructure finance company, IIFCL , to guarantee all infrastructure bonds, helping generate long-term funds for the sector.

"The policy changes made by the government have been quite good and are likely to have a positive impact," Singh said.

He also said NHAI plans to raise up to 55 billion rupees ($1.2 billion) this year via tax-free and taxable bonds, adding the firm also has plans to tap overseas debt market in the next fiscal year.

Officials have said bureaucratic and regulatory hassles keep foreigners from jumping into the fray on their own, and tend to look for joint venture partners.

India is currently building 13 kms of roads a day against a stated target of 20 kms. Singh attributed the delay to a slow bidding process in the past and said the target could be achieved by 2012.

"It takes at least two years to complete road projects after the actual construction work begins. If you had awarded fewer projects earlier, how could you achieve the desired results today?"

India's infrastructure deficit acts as a brake on the economy and is seen a drag on achieving a growth pace similar to China's double-digit economic expansion. Poor infrastructure is also partly responsible for high inflation.

A Planning Commission report showed the country missed its target for power sector and road additions in the last fiscal year.

India Infrastructure Finance Company (IIFCL) on Tuesday said it will come up with an infrastructure bond issue in December to raise around Rs 1,000 crore. “We have been given permission to raise funds through tax free bonds. We expect to raise Rs 1,000 crore from this bonds this fiscal. Around December bonds will come in the market,” IIFCL chairman and managing director S K Goel said. The bond issue proceeds would be utilised to finance the infrastructure projects in the country. The bonds would have an interest rate somewhere between 7.5-8%, he said.

He said IIFCL has also signed agreement with Punjab National Bank , Indian Bank , Allahabad Bank and United Commercial Bank to help fund infrastructure projects in the country.

IIFCL is engaged with several public sector banks to make takeout financing scheme attractive. The scheme involves three parties - the project company, taking over institution and lending banks or financial institutions.

As per the scheme, IIFCL will take out the infrastructure loan from the books of the original lender up to 100 percent of the outstanding amount subject to the condition that the total takeout amount does not exceed 50 percent of the total residual loan of the infrastructure projects.

Since its inception in April 2006, IIFCL has emerged as a key player in infrastructure financing space and it has made gross sanction of 27,778 crore in 156 projects involving project cost of 2,33,399 crore.

Goel said IIFCL did its own due diligence of the proposals before considering them for takeout financing. It was aimed to address the asset-liability mismatch faced by banks while lending to infrastructure sector.

Indian utility company Reliance Infrastructure has secured INR 7000 crore (US$ 1.6 billion) of debt to fund the second phase of the Mumbai Metro scheme. The 32 km line will cost INR 11500 crore (US$ 2.6 billion) in total and will connect the city's northern suburb of Charkop, with the eastern suburb of Mankhurd, via Bandra in the city centre.

The scheme will be built as a build-operate-transfer (BOT) concession, with Reliance setting up a special purpose vehicle (SPV) company, Mumbai Metro Transport Private to take on the construction and operation of the line. Other partners in the SPV include Canadian contractor SNC-Lavalin. The concession will last 35 years, with the option of a 10 year extension.

The route will include 27 stations along its 32 km length, and construction is due to get underway in December. The concession agreement stipulates that construction must be completed within five years of commencement.

In addition to the INR 7000 crore (US$ 1.6 billion) raised by Reliance, the project will receive INR 2298 crore (US$ 520 million) from the Maharashtra state government to fill the 'viability gap' in funding. The balance of the funds will be covered by the SPV's equity.

If Chinese companies wish to grow in India, they must localise and contemplate greater commitment and creativity, said Indiaâ€™s ambassador to China. â€œThe experience of the more successful Chinese companies points to their emphasis on localisation. As sourcing from China increases, so too will market
demands for greater localisation,â€ said S. Jaishankar, Indian ambassador.

The remarks were a part of the pitch to invite Chinese industry to invest in Indian infrastructure building on a potentially larger scale than Chinese investment in telecom and power. Road and transport minister Kamal Nath was in Beijing last month to invite Chinese companies for road projects even in Kashmir.

At every business event in China this year, India clarified that its visa policy discourages Chinese firms from flooding Indian projects with workers. â€œChinese companies are still developing an approach for the Indian market,â€™â€™ said Jaishankar. â€œApplying a global template, they expect to send out large numbers of personnel including in the semi-skilled category without giving adequate thought to how they would be received. When these approaches are challenged because of their unsuitability, they do not always appreciate the need to change their way of working.â€

Bilateral trade may hit $60 billion this year, up from under $3 billion 10 years ago. Indian companies are sourcing Chinese equipment for power, telecom, steel, railways, mining and construction. Electrical machinery exports accounted for 30 per cent of Chinese exports this year, and machinery 26 per cent.

Chinese â€˜project exportsâ€™ to India are expected to take advantage of the 2007-12 plan targets that include adding 80,000 MW generation capacity and 20 km of new roads per day. â€œIndiaâ€™s infrastructure demands could take economic cooperation with China to a completely new level,â€™â€™ said Jaishankar, listing opportunities in steel, metro projects, railway modernisation and ports.

The Indian business community is finding it difficult to make inroads in China, he said.